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Tag: ethanol

The other day, The Wall Street Journal provided a public service by lambasting Newt Gingrich for his absurd speech to the ethanol lobby in Des Moines last month (money line: ”Obviously big urban newspapers want to kill it because it’s working, and you wonder, ‘What are their values?’”). Today, Gingrich and fellow ethanol-maven James Woolsey struck back in those very same pages. In doing so, Gingrich provided yet more evidence that he’s intellectually unfit for office.

“It is in this country’s long-term best interest,” he said, ”to stop the flow of $1 billion a day overseas.” Really? So money sent overseas is gone forever. News to me. The only thing you can buy with dollars earned from oil sales to the U.S. is to buy things denominated in dollars or to exchange them so that someone else can. And we sell a lot of stuff to foreigners that are denominated in dollars (treasury bills for one) and that money comes right back to the good old U.S. of A.

But put that aside. If Gingrich really believes this, then why not just ban all imports all together? Is that what the GOP is about these days - rank gooberism on trade?

And one other thing; the U.S. does not spend $1 billion a day on foreign oil. It spends about half that; $530 million a day (in 2009 anyway).

“[I] co-produced a movie with my wife, Callista, ‘We Have the Power,’ that argued for an ‘all of the above’ energy strategy which would maximize all forms of domestic energy production.” Apparently, being a pol means that one doesn’t have to pick and choose between investments a, b, or c. We’ll just mandate everyone invest in everything that can attract a lobbyist.

When you hear this stuff about an ”all of the above” energy strategy, what you’re hearing is a complaint that the Democrats aren’t subsidizing enough of the energy industry. They are too tight-fisted with the public purse. They are not ambitious enough in their planning. And while Republicans bang the table for more, more, and more handouts to private corporations, liberals like Amory Lovins (prominent left-of-center energy guru) and Carl Pope (former head of the Sierra Club) call for zeroing out everyone’s subsidies and leaving the energy market the heck alone (at least when it comes to this matter). It’s a mad, mad world.

“Nevertheless,” says Gingrich, ”the Journal attempts to equate my career-long commitment to increased American energy production with the anti-energy agenda of President Obama. This is a laughable charge, especially considering I have been one of the most vocal opponents of the president’s energy policies since he took office.” Perhaps, but on this matter, Gingrich is attacking the administration from the Left.

Even more amusing was James Woolsey’s lecture to the editorial board over what it means to be a conservative. “We could not help wondering,” he asked along with his co-author, Gal Luft, ”why the Journal, despite its commitment to free enterprise, chose to attack Newt Gingrich for his call to open vehicles to fuel competition, which would cost auto makers under $100 per new car.” Well Jim, a commitment to free enterprise is a commitment to allow enterprises to be free to produce whatever they want. Of course, if Woolsey had read Gingrich’s speech to the ethanol lobby, he would not need to wonder - it’s about their sick, twisted values.

Nonetheless, Woolsey claims that such a mandate ”is perfectly in line with conservative economic principles.” That may be true given what conservatives believe about economics. But it’s not consistent with a principled support for a free market.

Finally, “Challenging Mr. Gingrich’s conservative bona fides based on his support for breaking oil’s virtual monopoly over transportation fuel is not only myopic but also the best gift the Journal can give OPEC.” But … oil dominates the transportation market because it is a heck of a lot cheaper than any other fuel. If it weren’t so much cheaper than ethanol, then we would have no need for such massive subsidies for the same. The same goes for electric cars. If and when that changes, oil’s “monopoly” will crumble. Until then, taking oil out of transportation markets simply takes cheap fuel out of transportation markets. It would be fun to watch a Gingrich/Woolsey ticket run on that.

Given that crude oil prices surged to nearly $90 per barrel on Friday, and could spike even higher if the crisis causes a shutdown of the Suez Canal, how should policymakers in Wasihngton respond regarding oil and the crisis in Egypt? Does the situation underscore a need for more domestic production? And does this crisis bolster or hamper Obama’s clean energy initiative that he called for in his State of the Union address last week?

My response:

The unrest in Egypt should have no bearing whatever on American energy policy. Like nearly every other commodity – food, clothing, shelter, education, health care – energy, from whatever source, is far more efficiently and equitably produced and distributed by the market than by governments, even when foreign governments play a part in that process. We saw that in the “energy crises” of the ’70s; we’ve seen it in every ”crisis” since.

Why, in the name of “energy independence,” should the U.S. government “promote” domestic production if foreign energy is cheaper? Do we imagine that manifold foreign producers will not supply us if the price is right? Where’s the evidence for that? Any government promotion should be by simply getting out of the way and letting the market determine where energy is produced.

Nor should today’s Egyptian unrest affect Obama’s “clean energy initiative,” which should fall on its own terms. It’s nothing but a massive government intrusion into the market, subsidizing expensive sources of energy for little environmental gain, making us all poorer, but especially the poorest among us. Do we need any better example that the ethanol boondoggle, which even Al Gore has admitted is environmentally destructive? Energy policy will be an early test of whether the new House majority is serious about reducing the role of government in our lives.

[Cannon] is no doubt right that environmentalists and agribusiness worked together to promote government subsidies to ethanol through about 2006. But by 2007 (when the ethanol mandate was doubled) the environmentalists had dropped out of the pro-ethanol coalition, to be replaced by national-security hawks! If you run into him, please tell him to stop blaming environmentalists for current biofuels policies!

If environmentalists have recently dropped their support for ethanol subsidies, they deserve credit for that. Mea culpa.

I would rather have been completely wrong about the environmentalists’ support for ethanol subsidies. But I’ll settle for being partly wrong.

Here’s a poor, unsuccessful letter that impressed the relevant New York Times reporters, but not their editorial overlords:

It may seem counter-intuitive that bleeding-heart anti-hunger groups and “Big Food and Big Beverage” would ally to oppose Mayor Bloomberg’s request to prevent New Yorkers from using food stamps to purchase sugary sodas [“Unlikely Allies in Food Stamp Debate,” October 16]. Yet the “bootleggers and Baptists” theory of regulation explains that this “strange bedfellows” phenomenon is actually the norm, rather than the exception.

Most laws have two types of supporters: the true believers and those who benefit financially. Baptists don’t want you drinking on the Lord ’s Day, for example, while bootleggers profit from the above-market prices that Blue Laws enable them to charge on Sundays. Consequently, both groups support politicians who support Blue Laws.

Baptists-and-bootleggers coalitions underlie almost all government activities. Defense spending: (neo)conservatives and defense contractors. President Obama’s new health care law: the political left and the health care and insurance industries. Ethanol subsidies: environmentalists and agribusiness. Education: egalitarians and teachers’ unions. The list goes on.

It’s easier to illustrate the theory (and sexier) when the bootleggers are non-believers who cynically manipulate government solely for their own gain. Yet one can be both a Baptist and a bootlegger. The Coca-Cola Company may sincerely believe that society benefits when the government subsidizes sugary sodas for poor people. Even so, a bootlegger-cum-Baptist can still rip off taxpayers.